April 08, 2011

So for anyone out there who feared that this blog had died, rest assured that it is not completely dead, merely dormant for quite some time. But we hope to bring new life to the blog with the help and assistance of Hinna Upal who is in Pierce Atwood's Providence, Rhode Island office.

To try to get things rolling again, I thought I would provide a link to an interesting article that ran in the New York Times last month, in case you missed it. The article explores the growing sophistication of e-discovery software and the potential to (gasp) replace a lot of the work normally performed by lawyers in churning through hours spent reviewing thousands of pages of documents before they are produced in litigation. Others have written follow-up articles, and there has been extensive discussion about the real impact of evolving technology in the e-discovery world since the New York Times article was published. Some say the changes won't really result in the downfall of the human side of the legal profession, but instead bring about the kind of retooling and refocusing of lawyers that happens over time anyway. See, for instance, Ralph Losey's blog.

Time will tell how comfortable clients really are with relying more and more heavily on technology to fulfill their discovery obligations under the rules. As with many other areas, courts often are more forgiving of human error or oversight than they are with attempts to blame technology when something goes wrong.

The decision involved the defendants' failure to comply with an earlier order from the court that required them to "produce forensic images of the hard drives of both defendants’ computers from which they were to generate all material responsive to the plaintiff’s discovery requests," along with about 6,000 responsive emails, within 5 days of the court's order. Id. at 1-2. Along with the production of the hard drives and emails, the defendants were ordered to produce a privilege log. The defendants did produce the 6,000 emails, although did not complete the production until roughly three weeks after the date set by the court. Many of the emails had not been produced previously in response to the plaintiff's requests. The defendants did not produce their privilege log until several weeks after the date set by the court, and not until after the plaintiff moved for sanctions. As a result of the delays, the plaintiff sought discovery sanctions including entry of default judgment against the defendants.

The court analyzed the situation and appeared troubled by the defendants' noncompliance with the court's prior order. "It was and is not the defendants’ prerogative to produce the responsive documents when they feel able, regardless of the court-imposed deadline." Id.at 4. Interestingly, the court shifted the burden to the defendants to show that the plaintiff was not prejudiced by the tardy production, holding that "it is the defendants that should shoulder the burden of demonstrating a lack of prejudice to the plaintiff in each instance, or each email’s inapplicability to the ... document requests, if they wish to avoid sanctions for their tardiness with respect to the ...request for production, let alone their failure to comply with the court’s order." Id. at 3-4.

Nonetheless, Judge Rich concluded that the ultimate sanction was not appropriate, because the defendants did ultimately comply with the court order and the case was not yet included on a trial list. As a sanction, Judge Rich awarded the plaintiff fees and costs associated with the motion for sanctions, and recommended "that the defendants be barred from introducing at trial any of the documents that were untimely produced by them or from presenting as witnesses in their case-in-chief any of the individuals whom counsel for the plaintiff can demonstrate he first became aware of via the defendants’ untimely disclosures." Id.at 6. Judge Singal later adopted Judge Rich's recommendation for sanctions.

I'm not going to summarize all 87 pages of the decision, but it's certainly something any practitioner involved in major litigation where e-discovery is an issue will want to peruse. What's most interesting (and potentially frightening) about the decision was that unlike most reported e-discovery cases involving sanctions, where there was intentional, fairly egregious conduct on the part of the parties or lawyers, this one really didn't involve that. In fact, plaintiffs' counsel had instructed their client to preserve relevant documents four months before filing suit. But what the judge found deficient was not the lack of any effort to preserve documents, but the level of attention given to the preservation process. Among other things, the judge faulted the plaintiffs for failing to send out litigation hold letters soon enough.

The opinion sets up a roadmap for handling e-discovery issues, with a sliding scale of varying sanctions based on a continuum of fault ranging from negligence to gross negligence to willful conduct. Judge Scheindlin even included the text of what she deemed to be an appropriate spoliation charge in the decision.

What all of this means for lawyers and parties in major litigation is more bickering and fighting about discovery demands, complaints by one side or the other during discovery about the minute details of how documents were preserved and searched for and explanations for any of the inevitable gaps in documents, an increased risk of sanctions, and yet more cynicism that litigation can be turned into a fight over the process more than the merits of a case. no doubt this will further fuel the talk of many commentators (such as those previously reported about here and here) for finding ways to pull in electronic discovery. But whether those efforts actually lead anywhere will be another story.

February 17, 2010

For those who haven't seen it before, lawyers at Susman & Godfrey have put together a useful list of pre-discovery agreements that counsel for both parties may want to consider addressing and agreeing upon at the outset of litigation. It can be found in Section 55:19 in the attached document, starting at page 20.

The protocol generally seeks to make life easier for both sides. It includes a number of ideas that sound simple and like common sense, but often don't happen, such as:

"As to any discovery dispute, the lead lawyers will try to resolve it by email and phone, and no one will write letters to the other: just email and phone calls."

"All papers will be served on the opposing party by email."

Other ideas may not work in every case, but in certain litigation may make a lot of sense as means to keep everyone better organized and on the same page:

"All deposition exhibits will be numbered sequentially (Ex. 1, Ex. 2, etc.) regardless of the identity of the deponent or the side introducing the exhibit, and the same numbers will be used in pretrial motions and at trial."

"Depositions will be taken by agreement, with both sides alternating and trying in advance to agree upon the dates for depositions, even before the deponents are identified."

"Documents that the other side claims are privileged can be snapped back as soon as it is discovered they were produced without any need to show the production was inadvertent or that the documents are privileged."

"The parties will prepare and provide a notebook for the court and each juror. The notebook may contain a cast of characters, a list of witnesses (and their photos), a time-line, a glossary, dispositive documents, and blank paper for jurors' personal notes. The parties will do their best to reach agreement on the contents of each item in the notebook."

As they point out, sometimes there suggestions will benefit one side over the other, but on balance both sides will probably end up in the same boat. As they say, "Don't be greedy."

That case involved a building fire in which the issue in dispute was whether the fire was caused by a defective electric baseboard heater manufactured by the defendant, Federal Pacific. Federal Pacific moved in limine to exclude portions of two reports prepared by the state fire marshal's office and the Skowhegan Fire Department.

The fire marshal conducted an investigation and prepared a report which, among other things, included supposed statements made by the owner of the plaintiff company. Although Federal Pacific conceded that the remaining portions of the fire marshal's report might fall within the hearsay exclusion contained within Fed. R. Evid. 803(8)(C), it sought to exclude the references to the plaintiff's owner's statements as hearsay-within-hearsay. Relaying upon Weinstein's evidence treatise and a fairly similar First Circuit case involving hearsay statements contained within an FBI report, United States v. Mackey, 117 F.3d 24, 28-29 (1st Cir. 1997), Judge Woodlock had little difficulty in granting Federal Pacific's motion in limine to exclude the portions of the fire marshal's report reciting statements allegedly made by the plaintiff's owner.

As far as the town fire department report was concerned, the report contained the following statement: "Fire cause determine to be a result of faulty electric heater in bathroom in garage." Federal Pacific argued that the statement in the report on the cause of the fire was inadmissible because it was not expressed pursuant to the fire department's statutory authority (as the fire department was not charged with, and did not, investigate the cause of the fire), thereby failing to meet the requirements for admission under Fed. R. Evid. 803(8)(B). Federal Pacific also argued that the statement on causation was inadmissible because it was untrustworthy, so could not fall within the public report hearsay exception in Rule 803(8)(c).

The court side-stepped around the Rule 803 issues, finding that even if the statement in the report fell within one of the Rule 803 hearsay exceptions, it should be excluded as prejudicial under Fed. R. Ev. 403. As Judge Woodlock observed:

The critical issue in this case is whether a defect in Federal Pacific's electric baseboard heater caused the January 28, 2005 fire. As its report reveals, the Skowhegan Fire Department responded quickly to the alarm just before 9 p.m. and left the scene at 2:20 a.m. the next day. The report was filed immediately and there is no indication that a thorough cause and origin assessment was made or that the heater was examined for defects. Instead, the report simply states that “[f]ire cause determined to be a result of faulty electric heater in bathroom in garage.” It does not say who made this determination, his or her qualifications to make this determination, what they did to make this determination, and what other possible sources were considered and eliminated.

Id. at 5. The lack of any indication that the statement was supported by any investigation or evidence known to the fire department at the time the statement was made in the report was compounded by the risk that the jury might view the report as carrying "the imprimatur of municipal government," led to the risk the jury "could well place undue emphasis on its summary causation conclusion on the assumption that it reflects the considered opinion of a fire investigator, who is cloaked with governmental objectivity and expertise." Id. Based on the unreliability of the statement and the potential risk that it might cause mischief with the jury, the court granted the motion in limine as to that portion of the Skowhegan fire report.

Often these types of hearsay rulings occur in the midst of trial or in unwritten decisions. So this is a useful reminder on some basic evidence issues that frequently arise but often go unnoticed.

January 19, 2010

Magistrate Judge Rich issued an interesting opinion late last year that provided guidance on the specificity that a third-party must provide to support its assertion that it has been unable to locate documents in response to a subpoena.

In Campbell v. First Am. Title Ins. Co., Civil Action No. 08-311-P-S (D. Me. Nov. 18, 2009), the plaintiff served a subpoena on third-party T&M Mortgage Solutions, Inc. (“T&M”), seeking production of mortgage and loan files. T&M failed to produce anything by the designated return date, and so the plaintiff moved for an order requiring T&M to show cause why it should not be held in contempt. In response, T&M filed two affidavits from its employees that stated, among other things, that one of the employees personally searched through the company's closed files in a storage area and was unable to locate the processing file that would have contained the subpoenaed documents, that they were unable to locate the processing file pertaining to the mortgage in question, that they had no reason to believe that the file was destroyed, and that they were unaware of any reason why they were unable to locate the processing file. In other words, the file should have existed, but they were unable to find it.

Quoting a California district court case, Judge Rich stated that “[o]rdinarily, a sworn statement that a party has no more documents in its possession, custody or control is sufficient to satisfy the party’s obligation to respond to a request for production of documents[,] ... [i]f the documents sought are known to have been in the party’s possession, custody, or control, it would not suffice for that party to simply disavow their existence without adequately explaining the disposition of the documents.” Id. at 4. The court agreed with the plaintiff that the "affidavits are insufficient to assure First American, or the court, that reasonable efforts have been made to comply with the subpoena, including by way of ... a thorough search throughout T&M’s premises for documents that T&M effectively concedes should have been maintained within its files." Id. at 4-5.

The court directed T&M to undertake a new search and, if it still could not find the documents, to "submit verified declarations (i) detailing the time(s), date(s), and specific location(s) of its search for responsive documents; (ii) identifying the person(s) who conducted the search; and (iii) stating whether and when T&M has contacted the individual, known to T&M, who closed the plaintiffs’ October 2004 loan to request a copy of the documents." Id. at 5.

The decision provides a useful reminder on the need for details to back up a claim that documents sought in discovery are unavailable. Presumably the same degree of specificity would be required where it is a party that has been unable to find the responsive documents, as well.

January 11, 2010

The First Circuit issued a relatively unusual decision recently vacating a district court's discovery sanction that excluded the plaintiff's expert witness, which in turn led to the dismissal of the case.

In Esposito v. Home Depot U.S.A., Inc., No. 08-2115 (1st Cir. Dec. 30, 2009), the plaintiff failed to produce an expert designation within the deadline set by the district court (a deadline that the plaintiff apparently had proposed). The defendants moved for summary judgment, in part based on the plaintiff's failure to designate any expert to support his product liability claim. The plaintiff never offered any plausible explanation for his tardy disclosure, and so the district court entered an order precluding the expert from testifying. That order left the plaintiff without an expert, effectively leading to the dismissal of the case. It was that latter effect that seemed to trouble the court of appeals the most, leading to a fairly rare decision where - even applying the deferential abuse of discretion standard of review of the trial court's discovery order - the appellate court reversed.

The First Circuit stated that, "Because all parties acknowledged that the sanction carried the force of a dismissal, the justification for it must be comparatively more robust." In other words, where the preclusion of an expert is likely to result in the end of a lawsuit, district courts now must factor that impact into their analysis. The court was quick to point out that this "is not a case of a party repeatedly balking at court-imposed deadlines," or "a case where the sanctioned party ignored pre-sanction warnings from the district court," or "an act of calculated gamesmanship on the part of the sanctioned party." According to the court of appeals, the lack of such evidence, coupled with the severe impact of the sanction on the plaintiff, outweighed the lack of justification for the plaintiff's failure to comply with the scheduling order and the harm caused to the defendant (in the form of having to prepare summary judgment papers on a shifting playing field, the need to have their own expert supplement his disclosure in light of plaintiff's untimely disclosure, among others).

Judge Woodcock, sitting by designation, offered a thorough and thoughtful dissent, expressing concern that the First CIrcuit was imposing a new heightened standard for district courts to meet in deciding whether to preclude experts. In Judge Woodcock's view, the majority's decision may result in trial courts feeling constrained to exclude experts only where it makes no difference on the case; conversely, where the decision would have a significant impact on a party's ability to present its case, trial courts may be reluctant to enter such a stiff penalty. If that bears out, it might mean that the threat of preclusion as a tool for policing compliance with trial courts' scheduling orders doesn't carry as much weight as it always has.

It will be interesting to see if Judge Woodcock's concerns come to pass as district courts in the First Circuit apply Esposito in the future.

December 23, 2009

So a year ago I reported on a new Maine Rule of Evidence 514, that codified a privilege for certain statements made during mediations, and then reported on the Maine Supreme Judicial Court's decision to withdraw the new rule for further study.

The court has again promulgated a new Rule 514, along with modifications to Maine Rule of Evidence 408, found here. The changes go into effect on January 1, 2010.

The changes to Rule 408, which addresses offers to compromise, clarify that statements made by party in the context of settlement discussions cannot be used "to impeach a witness through a prior inconsistent statement or contradiction." Me. R. Ev. 408(a). The rule also has been amended to provide that statement made by a party or mediator in any court-ordered mediation, or in any mediation in which the parties and mediator have agreed in writing to confidentiality, is inadmissible except in instances of fraud and the like. Me. R. Ev. 408(b). Previously Rule 408(b) was limited to court ordered domestic relations mediations.

The commentary to Rule 408 provides that the rule "is designed to encourage parties to speak openly and freely in mediation by assuring them that their statements will not be usable against them in the case being mediated or in any other case between the same parties with the same subject matter." Interestingly, the comments also state that the new Rule 408(b) is not intended to "insulate statements in mediation from civil discovery." Arguably, then, the drafters may be envisioning a situation where a party can conduct discovery into what was said in another mediation, although whether such statements are admissible is a separate question.

The new Rule 514 adopts a new mediator's privilege. The new rule provides that "All memoranda and other work product ... prepared by a mediator shall be confidential and not subject to disclosure in any subsequent judicial or administrative proceeding involving any of the parties to any mediation in which the materials are generated; nor shall a mediator be compelled to testify in any subsequent judicial or administrative proceeding concerning a mediation or to any communication made between him or her and any participant in the mediation process in the course of, or relating to the subject matter of, any mediation." Me. R. Ev. 514(b). There are exceptions in instances of misconduct, or in order to prove that the parties actually reached a settlement agreement at the mediation, or in stances of criminal activity and such.

The commentary makes clear that the "privilege only applies to mediation proceedings conducted by a neutral mediator. Thus, when a party’s lawyer, a guardian ad litem, or other person with a particular point of view to represent attempts to function as 'mediator' in settlement or other discussions, the privilege is not applicable. The privilege also does not apply to conferences with “settlement judges” or other judicial officials who may be acting in a meditative capacity because of the importance of transparency of public justice institutions."

Notably, the "privilege belongs to mediators, not mediating parties," so the rule "does not empower a party to prevent a mediator from testifying if the mediator chooses to do so."

Justice Alexander issued a separate statement of non-concurrence, based on the comments provided by the Maine Attorney General, who requested additional privilege exceptions to allow testimony about threats or statements of intention to inflict other types of harm beyond bodily injury, and to permit the use of testimony about events occurring at mediations in protection from abuse proceedings. It is unclear why the Attorney General's requests were not acted upon by the majority of the court.

In Mohawk, the Court addressed a circuit split on whether the collateral order doctrine permits an immediate appeal of a discovery order permitting discovery based on a finding of a waiver of the attorney-client privilege.

At issue in the case was information concerning an interview that a former employee of Mohawk had with Mohawk's outside counsel while he was still employed by Mohawk. Mohawk argued that the interview and any documents related to it were privileged, but the district court ruled that Mohawk had waived the privilege previously and so the materials were discoverable. The court of appeals declined to accept an interlocutory appeal, holding that the collateral order doctrine did not apply because the discovery order would not be “unreviewable” on appeal from the district court’s final judgment.

The Supreme Court upheld the Eleventh Circuit's ruling in a decision issued December 8th, rejecting decisions in the Third, Ninth and D.C. Circuits that had permitted interlocutory appeals of discovery-related orders compelling production of arguably privileged materials under the collateral order doctrine.

The Court recognized that its stringent standards for immediate appeals "may burden litigants in ways that are only imperfectly reparable by appellate reversal of a final district court judgment," but that "has never sufficed." Slip op. at 5 (internal quotation omitted). As the Court framed the issue, the "crucial question, however, is not whether an interest is important in the abstract; it is whether deferring review until final judgment so imperils the interest as to justify the cost of allowing immediate appeal of the entire class of relevant orders." Slip op. at 7. The Court concluded that "postjudgment appeals generally suffice to protect the rights of litigants and assure the vitality of the attorney client privilege. Appellate courts can remedy the improper disclosure of privileged material in the same way they remedy a host of other erroneous evidentiary rulings: by vacating an adverse judgment and remanding for a new trial in which the protected material and its fruits are excluded from evidence." Slip op. at 8.

Finally, the Court noted that in extreme circumstances, a disgruntled litigant still retains limited options for seeking an interlocutory appeal of a privilege-related discovery order. The party could ask the district court to certify, and the appellate court to accept, an immediate appeal under 28 U.S.C. § 1292(b); the party could petition for mandamus review; the party could "defy a disclosure order and incur court-imposed sanctions"; or the party could invite the district court to hold it in contempt for disobeying the court's disclosure order, from which the "party can then appeal directly from that ruling, at least when the contempt citation can be characterized as a criminal punishment." Slip op. at 9-10.

Justice Thomas issued a concurring opinion, essentially asserting that the Court's collateral order case law has created a mess that should be avoided altogether in favor of a clear, predictable application of the appellate jurisdiction statute, which effectively would abolish the collateral order doctrine altogether.

In reality, those appellate options are extremely narrow and difficult to obtain, and most parties may be unwilling to risk sanctions or contempt, meaning that most litigants who believe they've been ordered to turn over materials they think are privileged will have little recourse until an eventual appeal post-judgment. And by that point, the ability to effectively raise the discovery ruling in the context of whatever other substantive legal issues are on appeal may be minimal.